Accounting For Dummies®, 4th Edition

17.1. Get in the Right Frame of Mind

So often I hear non-accountants say that they don't read financial reports because they are not "numbers" people. You don't have to be a math wizard or rocket scientist to extract the essential points from a financial report. I know that you can find the bottom line in the income statement and compare this profit number with other relevant numbers in the financial statements. You can read the balance of cash in the balance sheet. If the business has a zero or near-zero cash balance, you know that this is a serious — perhaps fatal — problem.

Therefore, my first bit of advice is to get in the right frame of mind. Don't let a financial report bamboozle you. Locate the income statement, find bottom-line profit (or loss!), and get going. You can do it — especially having a book like this one to help you along.

Sorting out financial report readers Shareowners and lenders have a direct stake in a business, of course. Quite clearly, they have important reasons to keep up with the information in its financial reports. In fact, they may have a duty to read its financial reports (such as the bank officer in charge of loans to the business, and investment managers of a mutual fund owning stock shares in the business). But many other people have a stake in a business and should consider looking in its financial reports. Consider the following examples: Employee retirement benefits depend on whether the business is fully funding its plans; employees should ...